280. Surely this is the central issue of all
of them about the USO and the whole debate about which services
are threatened, the question of whether or not urban is supporting
rural as is the prevailing scent, although I do not accept that
necessarily. The argument is the urban service is supporting the
rural service. Why do you not know the difference in unit costs
between the two?
(Mr Roberts) I do know the difference, Mr Trickett,
it is just that we do not have the information with us.

281. Surely you have it in your heads?
(Mr Roberts) No, I do not carry it in my head in an
£8 billion business.

282. Why not?
(Mr Roberts) Because in an £8 billion business
you do not carry that sort of information in your head.

283. I find that absolutely extraordinary. I
find it absolutely extraordinary that we do not know the difference.
Can I impart my experience which is that I represent an area with
a lot of villages, as many of us probably around here do, and
you provide a wholly inadequate service to the rural villages
which I represent. The fact is there is not a really universal
service provided at all across this nation. You provide two services,
one to urban dwellers and a much poorer service to the rest of
us. I rather think the people of Hemsworth are subsidising the
recipients of Leeds and the fact that you do not know whether
or not that is the case is significant, is it not?
(Mr Roberts) The organisation knows and the organisation
will know. I do not happen to have it in front of me as I am in
front of you today.

284. Are you able to tell us? Give us a guess?
(Mr Roberts) No, I am not going to guess.

285. You have no idea at all?
(Mr Roberts) I do not have the numbers in my head,
no.

286. Can I ask your colleagues, do they know?
(Ms Cassoni) We publish our regulated accounts which
break down our costs in a particular way. I think you are asking
us what the different costs of the different products are.

287. I am suggesting to you that urban areas
receive two deliveries a day, the first of which is early in the
morning, rural areas get a delivery, if you choose to deliver
it, at whatever time of the day you choose to deliver it. It does
seem to me that people of my constituency actually are subsidising
the larger urban centres close by. Leeds needs to do well, it
is my old city so that is not a problem. I rather resent the suggestion
that you should be cutting rural services or maybe it is the rural
burden which is crushing the post office when you cannot demonstrate
that you even know.
(Mr Roberts) I do not think anybody is saying that
the rural burden is crushing the post office. Certainly we have
not suggested we are cutting any rural services.

Jon Trickett: The Committee might be interested
to receive any statistics you can provide us with in relation
to that.[3]
I think I have asked you three questions, one on overheads

289. Private sector comparators, rural/urban
split and overhead direct cost ratios and so far we have not had
much success, have we really? I want to ask you about Postcomm
which strikes me as a rampaging elephant really, a rather clumsy
one as well. I notice that Postcomm do not have a single member
of staff where they need to, with direct experience at all of
the postal business. What is your view of the motivation behind
Postcomm's desire to proceed almost at reckless speed in relation
to this matter? Why do you think they are doing this?
(Mr Roberts) I think Postcomm have been set up with
a clear mandate which is to introduce competition. They are doing
that, I think, in the way that they think best. You have heard
some of my discussion this afternoon around why I do not think
that is the right way to go but I cannot really go any further
than that. All we are clearly being told is that is their view,
the Commission's view, about the right way to introduce competition
and the right way therefore to improve the industry.

290. I do not accept what you have just said.
We can see on page 19 the duties of Postcomm are quite clear.
The duties of Postcomm, the primary objective is to safeguard
the universal postal service ". . .at a geographically
uniform and affordable tariff". Its secondary function is
to exercise its ". . . functions in a manner best calculated
to further the interests of postal users . . ." and then
it says ". . . wherever appropriate by promoting effective
competition". You said its primary function was to bring
about competition.
(Mr Roberts) Sorry. You asked me what I thought their
motivation was?

291. Yes. Why are they allowing a secondary
statutory objective
(Mr Roberts) I do not know, I think that is a question
you may already have directed to Postcomm.

292. I am wondering what you think.
(Mr Roberts) Yes. What I was about to say is I think
at the moment they have focused all their attention on that. In
terms of why they are doing that, I do not know. Certainly everything
that we have seen, and Mr Sweetman described to the Committee
a few minutes ago that we thought they may have got the order
wrong in looking at the USO later than looking at the competition
and to that extent we would prefer them to look at the USO first
and then look at competition. They have chosen not to do that
and all I can thinkand this is me trying to speculate about
their motivesis they believe that by introducing competition
in the way they have produced that is the best way to go about
their role.

293. Certainly I think something needs to happen
to check out the complacency. I would have expected you to say
that this is an inappropriate reading of the statutory functions
which Parliament imposed upon Postcomm. You have said their statutory
duty is to bring about competition. Would you agree that is not
the case?
(Mr Roberts) I actually said I thought that was what
they thought.

294. I see.
(Mr Roberts) I think we set out to you earlier on,
Mr Sweetman read it into the record, I think, what we thought
was their primary role and their secondary role which is very
much in line with this.

295. I have two minutes left, if I may. I want
to ask you about the USO. It is going to be reviewed. I do not
believe we have a universal service, in fact I know we do not.
I am sick of complaining to yourselves and failing to get responses
about the poor service to business people and domestic customers
in my patch. What do you think should happen to the USO? How do
you believe it should be redefined, if it should be redefined
at all?
(Mr Roberts) I do not think that universal service
should be redefined. I think that every post office in the world,
all developed countries, provides a universal service. I think
the universal service in the way that it is defined in the Act
is fine. At the moment in spite of your views, and doubtless you
have had experience in your own patch, we are providing services
well above what the Act defines as the universal service so to
that extent the Act defines a minimum and in many ways we are
operating above that minimum in terms of the number of deliveries
and other things that we do. I think the Act as a minimum sets
out one delivery a day throughout the whole country, collections
and everything else. I think that is a minimum and I think we
ought to be trying to do better than that which we are. That is
the whole aim for us.

296. Can I ask, finally, about your rebalancing
prices which we have just heard about a time ago. Rebalancing
prices, which is your expression, implies differential pricing
structures for different types of markets. In a sense that is
in contravention of the USO, is it not? I just wondered if you
want to say any more about your views in relation to that?
(Mr Roberts) I think over the yearsI will bring
colleagues inprices in some places, some products, some
weight steps have got out of kilter with costs. Because we have
had a uniform pricing we have had basically price averaging based
on cost averaging, that tends to happen. If in fact the uniform
price in particular is going to come under threat in the way that
Mr Sweetman was describing earlier, then we would want the opportunity
to look at certain products. I do not think it affects the universal
service, in other words that service would still be provided.
To go back into the discussion again about the uniform price and
whether that can be maintained, our view is that we would prefer
to maintain a uniform price, if that comes under attack that is
the point at which we might want to propose some price rebalancing.

Jon Trickett: I have had my final warning.

Mr Osborne

297. If I can return to the job losses because
certainly I have been confused by the answers you have given both
to Mr Davies and to the Chairman. As I understand it, you have
announced 15,000 job losses today.
(Mr Roberts) Yes.

298. You expect the total package to be around
30,000?
(Mr Roberts) 30,000 redundancies, yes.

299. However, if there is further liberalisation
there could be up to 15,000 more as a rough guess?
(Mr Roberts) I was invited by Mr Davies to try and
do a calculation which I am slightly reluctant to do because I
think it can mislead but if you are just assuming that all that
£750 million had to come out of the cost base and it was
staff, that is what it would roughly equate to.